AIB chief executive David Duffy has told the Oireachtas Finance Committee the bank may offer debt write downs to residents of Priory Hall who have mortgages with it.

“We will negotiate an individual solution with them, up to and including, debt write down if the circumstance warrants it,” he said.

The chief executive added that the 27 AIB customers in Priory Hall, of which 18 were home loans and the remainder were buy-to-let properties, are currently on moratoriums.

“We are very sympathetic because this isn’t an issue that is typical of the circumstances that we’re dealing with,” he said while adding that “great majority” of the Priory Hall customers have been spoken to directly.

Meanwhile, the Government is open to the idea of demolishing and rebuilding the complex, according to Minister for the Environment Phil Hogan.

Dublin City Council has been housing 41 families in temporary accommodation since the apartment complex was evacuated in October 2011 under the Fire Services Act due to a potential fire hazard.

A mediation process chaired by retired Supreme Court judge Joseph Finnegan is still ongoing and the council has guaranteed to continue providing housing for the residents until November.

Mr Hogan today said he is eager to see a resolution to the residents’ plight once the courts adjudicate on the legal action into the circumstances that led to the homes being evacuated.

The Minister’s comments come just days after a former resident wrote an open letter to the Taoiseach asking him to intervene in the controversy after her partner took his own life.

Mr Hogan told RTÉ radio the problem could cost €10 million to €12 million to fix, and said the Government would approach the matter with an “open mind”, adding that one solution could be to demolish the development.

He said the difficulties experienced by the residents were no fault of their own and he would “deal specifically with that case once the court process is completed”.

The matter is due to be concluded in the courts next month but Mr Hogan would not give a date by which the issue of accommodation would be resolved, saying he didn’t want to give residents “false hope”.

The Government has come under increasing pressure to act on Priory Hall since Stephanie Meehan’s partner of 17 years, Fiachra Daly, died by suicide last July.

In her letter to the Taoiseach, she said pressure to pay arrears on their apartment – in which they have not been able to live for the past two years – appeared to be a factor in his death.

Today Mr Hogan said he had been unable to meet Priory Hall residents because, as a Minister, he had to observe the law and wait until court proceedings had concluded.